Effective Date: March 1, 2023

Nestimate Disclaimer

Any and all displayed metrics, whether Internal Rate of Return, Return on Investment, or otherwise, presented on this site are for informational purposes only and should not be relied upon for investment, or any other, decisions. Nestment makes no claim or warranty to the accuracy, expected returns, or probability projections, as they do not reflect actual future performance. Metrics are provided by third parties and are not independently assessed by Nestment or its affiliates. We cannot ensure the quality or accuracy of any and all third-party provided data.

Data sources we leverage

Calculations

Estimations

  1. STR occupancy rate, STR daily rental rate, LTR monthly rental rate: We use a rolling 12-month median of similar listings in the area to estimate these rates.
  2. Property taxes: We use state-level property tax rates to estimate property taxes.

Assumptions

  1. Interest rate: We use the current federal interest rate.
  2. STR expense ratio: As a rule of thumb, we set the expense ratios for STR’s to 40%. This covers things like a professional property manager, utilities, trash, cable/internet, landscaping, etc. You can adjust this ratio if you want to increase or decrease the monthly expenses you are predicting. STR’s typically have higher guest turnover than LTR’s and require more management and cleaning.
  3. LTR expense ratio: As a rule of thumb, we set the expense ratios for LTR’s to 25%. This covers things like a professional property manager, utilities, trash, cable/internet, landscaping, etc. You can adjust this ratio if you want to increase or decrease the monthly expenses you are predicting. LTR’s typically have less turnover and management needs than STR’s.
  4. Home insurance: We currently use a flat rate of (0.5%) of the home price to calculate home insurance.

Modeling

N/A - Not Enough Data

  1. If we cannot find the beds / baths of a specific listing, some Nestimate calculations might show “N/A”, meaning we don’t have enough data to serve accurate predictions.
  2. You can, however, adjust inputs from “0” to make show Nestimate calculations.

Home Affordability Calculations

These calculations utilize the Fannie Mae multifamily home loan program to put a 5% down payment for a 30 year fixed mortgage at a 6.5% interest rate (rates subject to market conditions) on a triplex property.

Home Price

The total down payment available is calculated by multiplying the down payment amount by the total number of co-buyers in the group. The home price is then calculated by dividing the total down payment amount by 0.05 to simulate a 5% down payment. If the amount is greater than the max triplex loan limit of $1,033,000 then that limit amount is used. Higher loan limits do exist for quadplexes.

Equity Growth

The equity growth is calculated by dividing the pro rata projected equity value in the home in 5 years by each member’s down payment amount. The projected 5 year equity value factors in the home locality’s forecasted appreciation along with the principal contribution portion of each monthly mortgage payment. The return is significantly higher than the projected appreciation of the home because it is calculated relative to the down payment amount, which makes for a more accurate measure of return on initial investment.

Monthly Cost

The monthly cost is calculated by subtracting the monthly mortgage amount from the city's projected median rent for a 3 bed unit, and dividing by the group size. This assumes one unit is occupied by the buyer and the remainder are rented out.

For further customizations or personalization, please book a free call with a Nestment team member.

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